Why Can’t I Get The Published Rates

Wish you had taken better care of your credit? Shopping for an interest rate will make your head ache if your credit has dings.

In today’s lending landscape Fannie Mae and Freddie Mac are the primary purchasers of conventional mortgages. Even if your accountant is Mr. Creative, or you can’t wait to spend Granny’s inheritance it is not going to help you receive a better interest rate.

Banks and lenders sell their loans to Fannie Mae or Freddie Mac (Therefore, their underwriting guidelines are required to be followed). Every day Fannie Mae publishes the rate in which banks are paid for their home loans. Consumers read it on-line and mistakenly believe that it is the going rate for borrowers. This is a raw rate before profit and risk layers are added. Some lenders publish rates that do not mention credit scores or specific program details (Except in the itty-bitty print).

Fannie Mae and Freddie Mac pay banks a reduced amount for the 800 credit score loans with loan to values above 75%. If the score is below certain thresholds they pay even less.

What is a poor bank to do in this day and age? Why pass on the loss of their profit to the borrower. At the end of the day the borrower pays with a higher rate.

FYI 1: In our credit driven and identity stealing world, it is a good idea to contact the three credit bureaus: Experian, Transunion and Equifax and monitor your credit at least once a year, or contact Annual Credit Report.com. One bureau is NOT a true indicator of a credit score. Some creditors do not submit to all bureaus.

FYI 2: Do not ignore collection notices! Even if the notice comes from that no good cell phone company that your former girlfriend said she paid. One collection can drop your scores a 100 points! It doesn’t matter if the remainder of your credit is perfect. A $60.00 collection could cost you thousands over the life of a loan.

Thought: ‘Our business in life is not to get ahead of others but to get ahead of ourselves–to break our own records, to outstrip our yesterdays by our today, to do our work with more force than ever before.’ Stewart B. Johnson

Eric McAllister